Sam Fenwick
- Partner
- Insolvency & Restructuring
Kession Capital Ltd
On 3 March 2026, following the hearing of an unsuccessful application for directions of the administrators of Kession Capital Ltd, Deputy ICC Judge Curl KC made an order winding up the company. He later gave his reasons in writing for doing so: Re Kession Capital Ltd [2026] EWHC 785 (Ch).
On 22 April 2025 Sridhar Venkiteswaran, a judgment creditor, made written demand on the company for payment of its debt to him. That prompted the company to go into administration under Sch B1 para 22 Insolvency Act 1986 on 28 April 2025. The avowed reason for putting the company into administration was to protect it while it awaited a decision on an appeal to the Supreme Court regarding certain claims against it, but not including that of Mr Venkiteswaran. The effect of the administration was, however, to make Mr Venkiteswaran’s judgment subject to the statutory moratorium under Sch B1 para 43, which, in effect, operated as a stay on his ability to enforce, in spite of the fact that the Supreme Court itself had imposed no stay on his rights.
The administrators’ proposals, as required by Sch B1 para 49(1), were delivered to the company’s creditors on 19 June 2025. The objective of the administration was said to be the one provided for by Sch B1 para 3(1)(c), i.e. to realise property to make a distribution to one or more secured or preferential creditors. The company had no secured creditor but it did have a preferential creditor, who was identified as an employee to whom £800 was owed. In fact he turned out to be a director and the shareholder of the company. “On any view,” as Deputy ICC Judge Curl remarked, “this was a thin basis on which to bring the Company’s case within the ambit of the administration regime.”
The default position, set out in Sch B1 para 51(1), is that an administrator must seek a decision from the company’s creditors as to whether they approve the proposals, but there is an exception to the general rule where the objective of the administration is the one in para 3(1)(c) (see para 52(1)(c)), so in this case the administrators were not required to seek a decision from creditors. Para 52(2), however, allows a request for one to be made by creditors whose debts amount to at least 10% of the total debts of the company. By letter dated 27 June 2025, through solicitors, Mr Venkiteswaran and other interested parties made a request under para 52(2) of Sch B1. The solicitors also indicated that Mr Venkiteswaran intended to request a decision under paras 56 and 97 of Sch B1 to replace the administrators. The administrators’ solicitors responded, indicating that a number of additional creditor claims had been received, but not adjudicated upon, since the proposals were circulated. “We mention this,” they said, “purely as a matter of courtesy, as it could and probably would impact upon the outcome of any decision procedure and our clients have no wish to see your client waste money paying a deposit, which may not be recoverable.” Particulars of the additional creditor claims were not given but it transpired that, in fact, those other creditors were connected for the purposes of r.15.34(2) Insolvency (England and Wales) Rules 2016 and Mr Venkiteswaran would have been able to veto any decision by those connected creditors.
A virtual meeting to consider the proposals took place on 7 August 2025. The administrators’ proposals were rejected.
Thereafter the administrators applied to the court for directions under paras 53, 55 and 63 of Sch B1, asking the court to make an order to “hold the ring” pending the judgment of the Supreme Court on the company’s appeal, following which a further meeting of creditors was to be held. The application was opposed by 26 unconnected judgment creditors of the company. As the deputy judge said, “Although framed as an application for directions, [it] is in fact a keenly-contested piece of adversarial litigation: the Administrators are on one side and 100% of the creditors to have expressed a view are on the other.”
Unsurprisingly, the judge found himself on the side of the creditors:
“Having heard argument on 3 March 2026, I was left in no doubt that the Company should not remain in administration. I made an order at the end of the hearing for the Company’s compulsory winding up under paragraph 55(2)(e) of Schedule B1, giving brief reasons at that time for doing so. I indicated that I would give fuller reasons in writing at a later date, which I now do.”
He rejected the submission that the ring needed to be held until the Supreme Court had pronounced on the company’s appeal because the outcome of the appeal was irrelevant in as much as Mr Venkiteswaran, was not concerned in it.
“What is material,” the deputy judge said, “is that Mr Venkiteswaran would always have remained a judgment creditor of the Company in a significant sum (£351,449.45 as at the date of the creditors’ meeting on 7 August 2025) whatever happened in the Supreme Court. Although the outcome in the Supreme Court could have (and now in fact has) changed the creditor profile in the Company, the evidence before me indicates that the Company’s success on that appeal does not affect Mr Venkiteswaran’s ability to vote down any further proposals made in the administration. Mr Venkiteswaran is strongly opposed to the Company being or continuing in administration, as is each of the other Interested Parties.”
Furthermore, he said,
“[I]t was common ground between the parties that the Company would remain heavily insolvent even if its appeal to the Supreme Court was successful: Mr Venkiteswaran’s judgment debt by itself exceeds the Company’s disclosed assets. Indeed, Mr Hinton of the Administrators made clear in his evidence in reply dated 3 October 2025 (the last evidence filed in the current application) that he has ‘never asserted that the Company will be returned to solvency by the outcome of the Supreme Court hearing’.”
Deputy ICC Judge Curl concluded,
“In my judgment, the Administrators’ position on this application has failed to engage adequately with the central fact in the case, which is that there is no reasonable prospect that any proposals that do not provide for the Company immediately to commence liquidation will receive creditor approval, regardless of the outcome in the Supreme Court.”
He made an order winding up the Company under para 55(2)(e) of Schedule B1 to the IA 1986, observing:
“The jurisdiction to make such an order on an application of the present kind is well-established by authority: see Re BTR (UK) Limited [2012] EWHC 2398 (Ch), [2012] BCC 864, [80], per HHJ Behrens (sitting as a High Court judge); and Re Fortuna Fix Limited [2020] EWHC 2369 (Ch), [137], per ICC Judge Jones. I also acceded to the Interested Parties’ submission as to the identity of the Company’s liquidators and made an order under s 108(2) of the IA 1986 appointing Huw Powell and Paul Wood of Begbies Traynor (Central) LLP as joint liquidators of the Company in place of the Official Receiver.”
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
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